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December 2, 2003

Wartsila to manufacture propellers in China

Wartsila is to begin manufacturing propellers in China. Its wholly owned Wartsila Propulsion today signed an agreement with Zhenjiang CME Co. Ltd (CME), which is wholly owned by the China State Shipbuilding Corporation (CSSC), to establish a joint venture company. It will be 55%-owned by Wartsila and 45%-owned by CME and its name will be Wartsila-CME Zhenjiang Propeller Co. Ltd.

The company will produce LIPS and Kaida brand propellers. The joint venture's market area will the whole world.

"China's shipbuilding industry is growing rapidly and 15% of new ships are currently built in the country," says Wartsila president and CEO Ole Johansson. "China also is developing into a significant production country for ship equipment. The propeller manufacturing in China is Wartsila's first step in developing its production in this growing market."

CSSC is the leading shipbuilding corporation in China, notes a release issued by Wartsila. For CSSC it is important to create a network of competitive component suppliers for increasingly demanding ships. With Wartsila's design and expertize and CME's manufacturing skills the companies will create a competitive propeller supplier which has great growth opportunities in the global market.

The joint venture will commence operations in CME's premises in Zhenjiang some 220 km west of Shanghai. The Chinese party will provide the plant's production equipment and personnel, while Wartsila's contribution will be the design and manufacturing expertise. Operation is expected to be started early next year after the requisite business licenses are received. The management will come from CME and Wartsila. The new company will have approximately 270 employees.

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